Having tried to vary just about all of the settings on the VPN tunnle I have eventually managed to get the two units to connect.

I think the problem lies with a bug in the V2 - by comparing the VPN logs at both ends I have discovered that the V2 gets into a state where it won't make a reply to the initial request for connection from the V1, and won't sent a request to connect either - it effectively goes dumb.

Although I can't quite put my finger on it - by varying the settings and using plenting of hard reboots of the V2 it is possible to make it work.